F7 - Bulletin - Error

[jrggraham]

Got the F7 bulletin today, however I think there is an error. the Question started with Plateau, Savannah and Axle and ended up with Ocean, Sea and River:(

[Geetanjali]

Sincere apologies to all our members for the error in the latest F7 Bulletin on Consolidation

The following changes are required:

Plateau Co = Ocean Co
Savannah Co = Sea Co
Axle Co = River Co

Please note the following sections have these changes:

Start of the question:
On 1 October 2006 Ocean acquired the following non-current investments:
1. 6 million equity shares in Sea by an exchange of one share in Sea for every two shares in Sea plus $1 per acquired Sea share in cash. The market price of each Ocean share at the date of acquisition was $6.
2. 30% of the equity shares of River at a cost of $7.50 per share in cash.

Only the cash consideration of the above investments has been recorded by Ocean.


Journal entry for W2 Investment in subsidiary:

Shares issued by Ocean are not recorded we need to account for it.
Dr ---Investment A/c $ 18m
-------Cr Share capital $ 3 m
-------Cr Share premium $ 15 m


Title for W2

W9: Carrying amount of River at 30 September 2007


Please keep in mind that these changes do not have any impact on the calculations.

We regret the errors that have arisen in this month’s bulletin, and will make sure that it does not happen in the future.

Regards
Geetanjali

[jrggraham]

shouldn't that be one share in Ocean for two share in Sea?

[elvisfrederick]

Thanks for the practice question sent to me. Can you send me some more question samples for exam practice.